The company said in a statement that it continuously evaluates its business portfolio and takes capital allocation decisions from a long-term perspective.
Larsen & Toubro (L&T) has completed the strategic divestment of its electrical & automation (L&T E&A) business to Schneider Electric, a global player in energy management and automation. The all-cash deal was struck in May 2018 for Rs 14,000 crore.
The company said in a statement that it continuously evaluates its business portfolio and takes capital allocation decisions from a long-term perspective. Its exit from the E&A business is part of the strategic portfolio review process.
Commenting on the closure of this divestment, L&T group chairman AM Naik said: “The closure of divestment of the E&A business is a key milestone in our stated long-term strategy. The challenge was to carve out a business of this scale, with minimum disruption to the sprawling customer base and do it all amid the constraints of a pandemic.”
L&T CEO and MD SN Subrahmanyan said: “The deal was a complex M&A transaction involving a slump sale of the domestic business and share purchase transfer. This is in sync with our strategy to look at L&T in broadly three areas, EPC construction & projects, manufacturing & defence and services.”
L&T’s E&A business with its range of low- and medium-voltage switchgear, electrical systems, industrial and building automation solutions, energy management systems, metering solutions and projects and services business are transferred to Schneider Electric. Schneider Electric will use related brand insignia for a specified period as it has a strong brand recall in the switchgear market.
About 5,000 employees of the E&A business will become part of Schneider Electric. The manufacturing facilities of E&A in Navi Mumbai, Ahmednagar, Vadodara, Coimbatore and Mysuru in India and related subsidiaries in UAE, Kuwait, Malaysia and Indonesia are also being transferred to Schneider Electric.
In view of the pending local approvals, the subsidiary in Saudi Arabia, L&T Electrical & Automation Saudi Arabia Company (LTEASA), will be transferred to Schneider, once the requisite regulatory approvals are in place.